Archive for LIFE INSURANCE

Hello TradeMe – welcome to the world of life insurance

Posted by Steve

With much fanfare TradeMe have launched into the world of Life and Health Insurance distribution. Naturally, there has been chatter in the industry; Why TradeMe?  What will this do to the industry?

The aggregation business model is strong in other countries, iSelect in Australia, SuperMoneyMarket in the UK and Geico in the US all lead the way in this space. There is no NZ equivalent with the range of products and services these companies offer, but one would have to think Life Direct would be the best contender given its standing in the life and health space. From the side-line, one would think the Life Direct model had ample opportunity to flourish as an independent distributor. So, what has TradeMe got to gain by purchasing Life Direct?

Phil Macalister in GoodReturns questioned TradeMe boss Jon Macdonald, including asking why not implement a Pinnacle Life online model, in which the consumer can actually ‘buy’ on-line.  Would Pinnacle Life not have been a better fit for TradeMe consumers?

Unfortunately, Macdonald did not reveal much, other than to suggest the obvious strategy of growing market share by levering their vast website traffic to promote the offering, but making no comment on anticipated sales increase. Pinnacle Life in his view was not the right fit, TradeMe is not looking to purchase a manufacturer of life insurance products.

Pinnacle Life view TradeMe’s acquisition of Life Direct as positive for the industry. Yes, Life Direct will be a competitor, but they always have been. We can’t see what will change, other than Life Direct not needing to advertise as much – because they get a free ride on the back of TradeMe traffic and accessing TradeMe’s database. However, it may require renegotiating the commission they receive from the insurance companies that they represent, to feed the TradeMe distribution machine.

The good news for the industry is that TradeMe has elevated the category of ‘Life Insurance’ in the market for the entire industry and we believe Pinnacle Life will be a beneficiary. If it’s ok to source life insurance through TradeMe, then buying life insurance online direct from Pinnacle Life or a Cigna becomes an easier and maybe preferable option. Introducing a Life Insurance as a category on the TradeMe website tells consumer that ‘maybe you don’t need a broker after all to buy life insurance’.

The risk insurance market in NZ is worth about $1billion each year. Direct companies currently occupy only about 6% to 8% of the market. The banks enjoy approximately 28% of this market and the balance is served by independent financial advisers.

It’s difficult to fathom that TradeMe is targeting the ‘direct’ market segment given its relatively small size. And since the banks have a clear segment of their own, this leaves the segment traditionally served by financial advisers.

So, the question is probably not about how TradeMe will impact Pinnacle Life or other direct-to-market insurers; it is more about how TradeMe will impact the independent financial advisers.

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One joint life policy is not always better than two individual policies

Posted by Steve

You may automatically assume that buying a joint life insurance may be cheaper and better than buying two single life policies, BUT this is not necessarily the case.

For starters, generally taking out two separate life policies may be marginally more expensive, but you will get twice the pay-out if you both die during the insured term. With a joint single life policy there would only be a single pay-out.

Also, if you take out a joint life first death policy (often used for covering mortgages), the policy would pay-out then cease in the event of either of you dying during the term. This will leave the surviving partner having to take out a new life policy, which is often a lot harder and more expensive give the increased age of the surviving partner.

Finally, having each life separately underwritten and insured on its own merits, makes each party independent of the other. Hence the policy is not dependent on the survival of the marriage or partnership. With individual policies, all the potential arguments (like changing ownership or cancelling a joint policy) disappear.

So don’t just assume a first death joint policy is best for you.

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Safest way to travel in NZ …… public transport!

Posted by Steve

Safest way to travel in NZ …… public transport!

In promoting our complimentary accidental death cover offering, we came up with some interesting statistics about causes of death by travel accident. Who would have thought the safest way to travel in NZ is public transport!

The graphs below show a snapshot of the latest comprehensive statistics we could find.

 

 

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Snake oil or the real deal?

Posted by Steve
No doubt about the rise in popularity of homeopathic medicine and other alternative treatments…. but do they really work? Here is a representation of scientific evidence that attests to the effectiveness of some of the most popular supplement.
Do Health Supplements Really Work?

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Announcing our Special Events Benefits

Posted by Steve

Pinnacle Life recently announced special event benefits for its Life and Mortgage products. The benefit entitles policyholders to request increased levels of cover on the basis of changing life events, without requiring further medical evidence.

A ‘special event’ gives policyholders the opportunity to increase cover with no further questions asked regarding the insured person’s health. You qualify for a special event increase if:

  • the policyholders is aged 59 or less and has taken out or increased their mortgage within the past 3 months
  • the insured person has married (including a civil union), divorced or
  • the policyholder become a parent within the past 6 months.

Policyholders are entitled to 3 special event increases, with no more than 1 increase per year, provided that no single increase exceeds $250,000 and the cumulative total of all such increases doesn’t exceed 50% of the cover when the policy was initially acquired.

Where the special event relates to a mortgage, the increase in cover can’t exceed the amount by which your mortgage has increased. A special event increase is not available if the life insured is already loaded by more than 50% due to the insured person’s health.

In the coming weeks, Pinnacle Life will be incorporating the special events wording into the documentation of standing policies and will contact current policyholders who may qualify. The special events program clause is already available for new policies issued from the Pinnacle Life website.

Current policyholders can contact Pinnacle Life directly with any questions about how the special events program may affect their current policies

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Can marriage insurance protect a marriage?

Posted by Steve

On a recent visit to Beijing, China’s Sunshine Insurance Group showed me just how innovative they are in developing new products. Chinese life insurance industry may not yet be online, but in terms of product offerings, they claim to be the most innovative yet when it comes to insuring risk. To prove his point he described their recently introduced a new marriage insurance called “love you forever ” aimed at protecting the rights of wives in divorce.

According to the company, the insurer must be the husband and the wife will receive 60, 80 or 100% of the interest in the policy on divorce or on reaching its expiry term, whichever should come first. Fifty years after being insured, the wife will receive a payoff from the company to celebrate the golden wedding.

Using NZ currency equivalents, if the husband buys a $100,000 policy, on the 50th anniversary, his wife will get $800,000 from the account if she had a 100% interest in the policy. In the event of a divorce, the pay-out is substantially reduced. The incentive to maximise the pay-out is to stay married for the full term of the policy.

Sunshine Insurance Group said that women are still a vulnerable group in society as well as in marriage, so this was a way of protecting women’s rights. Some believe the idea is meant to reduce the chance of a husband having an extramarital affair.

However, other Insurance companies have expressed concerns about marriage insurance, pointing out that some couples might choose to divorce in order to qualify for a pay-out, and then re-marry, as there was nothing in the insurance contract preventing such abuse. Others criticise the stipulation that the wife benefits because sometimes wives are equally responsible for divorces.

Marriage insurance… innovation or just another attempt by Insurance Companies to incentivise its policy holders to retain their investment linked insurance policies?

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Worst time to travel by car…. around midnight Saturday!

Posted by Steve

The World Health Organisation recently released its Global Status on Road Safety Report 2013. You decide how NZ compares with the “key facts” provided by the WHO in the table.

World key facts NZ key facts
About 1.24 million people die each year as a result of road traffic crashes. In 2011, there were 259 fatalities in NZ per year
Road traffic injuries are the leading cause of death among young people, aged 15–29 years. In the ending 2011, 99 fatalities were in this age group. That makes 38.2% of all fatalities were aged between 15  – 29.
Half of those dying on the world’s roads are “vulnerable road users”: pedestrians, cyclists and motorcyclists. We fair much the same, see graph “Proportion of deaths by road users type” below.
Without action, road traffic crashes are predicted to result in the deaths of around 1.9 million people annually by 2020 See chart “Fatal crashes by time of day” to learn why we should look to minimise our travel around midnight on Saturdays and early mornings Sunday.
Only 28 countries, representing 416 million people (7% of the world’s population), have adequate laws that address all five risk factors (speed, drink-driving, helmets, seat-belts and child restraints) Please to report that NZ is one of the 28 countries with vigorous road safety laws in place.

Proportion of road deaths by user type

Road_deaths_time_of_day

Road_deaths_time_of_day

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New Bird Flu, are you at Risk?

Posted by Steve

A new strain of bird flu has broken out in China H7N9. Is the new bird flu strain likely to reach New Zealand or is this just another health scare? The Chinese H7N9 outbreak started just a few weeks ago, and so far authorities have reported upwards of 82 individuals infected with this strain of flu, with most of the cases originating in the Shanghai area. The most recent outbreak is the first time that the particular H7N9 strain has been seen in humans, joining a number of other flu variants that have crossed the species boundary, as you can see in this infographic.

Information is Beautiful on influenza

Diagram showing bird flu mutation

So far, no concrete evidence of human-to-human transmission of H7N9 has been found. That said, there are a few other options – as seen in the infographic, this particular flu can infect pigs, and may have also mutated to infect other animals with which humans might have contact. Alternatively, the virus may be able to survive outside the bodies of birds, which could result in contraction of the strain even without physically touching or being close to a bird.

If H7N9 turns out to be transmissible by human-to-human contact, there is the risk, as with any new flu strain, that it could turn into a pandemic. As of yet, H7N9 infections have stayed within China, – however, this could change at any time, so vigilance and flu-prevention techniques are always good practice.

 

For those traveling to China, avoiding poultry markets or any other areas where you might come into contact with birds is extremely wise, as are frequent hand washing and covering the face when coughing or sneezing.

Source: http://dailyhealthpost.com/new-bird-flu-scare-hits-china-are-you-at-risk/#axzz2RFWqUgGY

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What’s the difference between buying Funeral Insurance or a Pre-paid Funeral Plan?

Posted by Steve

Funeral insurance or “final expenses” insurance is a life insurance policy with a small cover amount, such as $5,000 to $25,000, that you may buy directly from and Insurer like Pinnacle Life. You can name any beneficiary, typically a family member, who would make the claim and receive the money upon your death. That beneficiary would then be responsible for using the money to carry out your wishes.

The beneficiary legally could decide to use the money any way they want, so make sure you trust your beneficiary. Also, if your cover amount exceeds the cost of your funeral, the beneficiary keeps the difference.

Another type of life funeral insurance is called pre-paid insurance. It is intended for the person who has selected specific arrangements at a funeral home and wants the assurance that those arrangements will be paid for and implemented.

Unlike funeral insurance policies, which you buy directly from an insurance company, pre-paid policies are sold by funeral home directors. The funeral home is the beneficiary of the policy and the funeral director receives a commission, for selling you the policy. The Funeral Directors Association of NZ website has some good information about pre-paid funeral plans. http://www.fdanz.org.nz/pre-paid-funerals.aspx

Unfortunately, unlike funeral insurance, there are no websites which allows one to comparison shop for pre-paid funerals, so you’ll have to phone around to compare prices and policy terms.

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5 biggest lies told on life insurance applications

Posted by Steve

Unfortunately some applicants succumb to the temptation to lie on the life insurance application forms in order to reduce their price of cover. Easy enough, but unfortunately non-disclosure in NZ has some very harsh penalties, including voiding a policy due to non-disclosure.

The 5 biggest porkies told based on Insurer research in the USA is a follows.

  1. I don’t use tobacco: Non-smokers pay almost half the rates smoker pay, which probably explains why this lie is most common.  Typically in NZ, if an applicant fails to disclose their smoking status accurately at the time of application when a claim is lodged the pay-out is reduced by the amount the life insured would have paid has they been paying smoker rates.
  2. I don’t use recreational drugs: More-often seen with agent applications as the applicant is most likely uncomfortable disclosing this to an unfamiliar life agent. The use of recreational drugs does not necessarily preclude you from life insurance.
  3. I’m not depressed: Neglecting to mention depression is common. Hopefully as mental health awareness becomes more prominent and acceptable; applicants will be more likely to give full disclosure on their mental health.
  4. There is no cancer in my family: This lie is more likely a result of ignorance than intention. Having had one family member diagnosed with cancer is unlikely to influence a life insurance application.  
  5. I only ever had one DUI charge: Moral underwriting, as it is known in the industry, is becoming a strong influence in life insurance underwriting. Better to be honest about DUI convictions as they are easy to validate come claim time.

Source: www.insure.com/articles/lifeinsurance/biggest-lies.html

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